Concept Paper on Impact Finance

Wednesday, July 15, 2020

We would like to inform you that "Concept Paper on Impact Finance" is formulated by Positive Impact Finance Task Force established under ESG Finance High Level Panel after vigorous discussions to promote finance creating positive impact in Japan.

Background

Towards the realization of the decarbonized society and the sustainable society and economy aligned with the Paris Agreement and SDGs, it is necessary to accelerate the paradigm shift of capital markets in order to establish a financial system that has better impacts on the environment, society and economy.
Impact finance, aiming to have positive impacts on the environment, society and economy while securing appropriate risk-return, is becoming a global trend. We believe that it will play a major role in supporting the improvement of sustainability, an axis of creating a new society, after COVID-19.
Although interest in impact finance is growing in Japan, and the number of the initiatives is increasing, impact finance is still at its early stage, and its dissemination in Japan is essential.
For the practice of impact finance, sharing a common understanding of the concept and developing impact assessment methods are demanded. Thus, in March 2020, Positive Impact Finance Task Force was established under ESG Finance High Level Panel.
Through vigorous discussions in the three Task Force meetings and the opinion exchange meeting with relevant parties, various opinions from broad perspectives were presented by the Task Force members and market participants. Based on these ideas, the "Concept Paper on Impact Finance" is formulated.

About "Concept Paper on Impact Finance"

This document regards impact finance, pursuing its impact on environment, society and economy, as a developed form of ESG finance and aims to make impact finance mainstreamed it with a large inflow of private funds. The first step is to promote the implementation of impact finance by major financial institutions and institutional investors.
This document summarizes the significance of impact finance, the four elements to be met, and the basic flow of the finance.
For more details, please see “Concept Paper on Impact Finance”.

Next steps

Based on this document, the Task Force is to formulate “Green Impact Assessment Guide (provisional)” with the ultimate goal that all institutional investors and financial institutions put impact finance into practice in all asset classes.